----

**UNITED        STATES **

**SECURITIES        AND EXCHANGE COMMISSION**

**Washington,        D.C. 20549**

**FORM        10-Q**

| **x** | Quarterly                  Report Pursuant to Section 13 or 15(d) of the Securities Exchange                  Act of                  1934 |
|-------|--------------------------------------------------------------------------------------------------------------------------------------------|

| o | Transition                  Report Pursuant to Section 13 or 15(d) of the Securities Exchange                  Act of                  1934 |
|---|---------------------------------------------------------------------------------------------------------------------------------------------|

**BRITTON        & KOONTZ CAPITAL CORPORATION**

|   | Mississippi                                                                                      |   | 64-0665423                                               |   |
|--------|--------------------------------------------------------------------------------------------------|--------|----------------------------------------------------------|--------|
|   | (State                  or Other Jurisdiction of Incorporation                  or Organization) |   | (I.R.S.                  Employer Identification Number) |   |

|   | o | Large                  accelerated filer |   | o | Accelerated                  filer |   | **x** | Non-accelerated                  filer |
|--------|---|------------------------------------------|--------|---|------------------------------------|--------|-------|----------------------------------------|

**x**

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*Table            of Contents*

**BRITTON&KOONTZ        CAPITAL CORPORATION**

**AND        SUBSIDIARIES**

**INDEX**

| **PART                  I.**  | **FINANCIAL                  INFORMATION**                                                                                                |
|-------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------|
|                          |                                                                                                                                      |
|                          |                                                                                                                                      |
|                          | **Item                  1. Financial Statements**                                                                                         |
|                          |                                                                                                                                      |
|                          | Consolidated                  Statements of Financial                  Condition                                                          |
|                          | Consolidated                  Statements of Income                                                                                        |
|                          | Consolidated                  Statements of Changes in Stockholders'                  Equity                                              |
|                          | Consolidated                  Statements of Cash Flows                                                                                    |
|                          | Notes                  to the Consolidated Financial                  Statements                                                          |
|                          |                                                                                                                                      |
|                          | **Item                  2. Management’s Discussion and Analysis of Financial                  Condition and Results of Operations** |
|                          |                                                                                                                                      |
|                          | **Item                  3. Quantitative and Qualitative Disclosures About Market                  Risk**                                  |
|                          |                                                                                                                                      |
|                          | **Item                  4. Controls and                  Procedures**                                                                     |
|                          |                                                                                                                                      |
|                          |                                                                                                                                      |
| **PART                  II.** | **OTHER                  INFORMATION**                                                                                                    |
|                          |                                                                                                                                      |
|                          | **Item                  1A. Risk Factors**                                                                                                |
|                          |                                                                                                                                      |
|                          | **Item                  2.** **Unregistered Sales of Equity Securities and Use of                  Proceeds**                        |
|                          |                                                                                                                                      |
|                          | **Item                  4. Submission of Matters to a Vote of Security                  Holders**                                         |
|                          |                                                                                                                                      |
|                          | **Item                  6. Exhibits**                                                                                                     |
|                          |                                                                                                                                      |
|                          |                                                                                                                                      |
| **SIGNATURES**                |
|                          |                                                                                                                                      |
|                          |                                                                                                                                      |
| **CERTIFICATIONS**            |

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*Table            of Contents*

**PART        I**
**FINANCIAL        INFORMATION**

**Item        1.**
**Financial        Statements**

----

*Table          of Contents*

| **BRITTON&KOONTZ                  CAPITAL CORPORATION AND SUBSIDIARIES**  |   |
|-------------------------------------------------------------------------------|--------|
| **CONSOLIDATED                  STATEMENTS OF FINANCIAL CONDITION**           |   |
|                                                                               |   |
|                                                                          |   |   |   |   |   |
|                                                                          |   |   |   |   |   |
|                                                                          |   |   |   |   |   |
|                                                                          |   |   |   |   |   |
| **A                  S S E T S**                                              |   |
|                                                                          |   |   |   |   |   |
|                                                                          |   |   |   |   |   |
|                                                                          |   | **June                  30,** |   | **December                  31,** |   |
| **ASSETS:**                                                                   |   | **2006** |   | **2005** |   |
| Cash                  and due from banks:                                     |   |   |   |   |   |
| Non-interest                  bearing                                         |   | $ | 8,798,125 |   | $ | 8,553,139 |   |
| Interest                  bearing                                             |   |   | 507,984 |   |   | 1,272,320 |   |
| **                    Total cash and due from banks**               |   |   | 9,306,109 |   |   | 9,825,459 |   |
|                                                                          |   |   |   |   |   |   |   |
| Federal                  funds sold                                           |   |   | 2,450 |   |   | 401,138 |   |
| Investment                  Securities:                                       |   |   |   |   |   |   |   |
| Held-to-maturity                  (market value, in 2006 and 2005,            |   |   |   |   |   |   |   |
| of                  $38,297,797 and $39,015,853, respectively)                |   |   | 37,749,853 |   |   | 37,994,043 |   |
| Available-for-sale                  (amortized cost, in 2006 and 2005,        |   |   |   |   |   |   |   |
|                    of $72,529,467 and $79,902,610, respectively)         |   |   | 69,811,995 |   |   | 78,287,012 |   |
| Equity                  securities                                            |   |   | 4,553,300 |   |   | 5,501,700 |   |
| Loans,                  less unearned income of $404 in 2006 and              |   |   |   |   |   |   |   |
|                    $794 in 2005, and allowance for loan losses of        |   |   |   |   |   |   |   |
|                    $2,470,677 in 2006 and $2,377,840 in 2005             |   |   | 240,646,097 |   |   | 242,534,011 |   |
| Loans                  held for sale                                          |   |   | 58,971 |   |   | 171,200 |   |
| Bank                  premises and equipment, net                             |   |   | 7,961,994 |   |   | 8,046,668 |   |
| Other                  real estate                                            |   |   | 1,339,249 |   |   | 1,470,584 |   |
| Accrued                  interest receivable                                  |   |   | 2,262,018 |   |   | 2,258,225 |   |
| Cash                  surrender value of life insurance                       |   |   | 956,424 |   |   | 936,378 |   |
| Core                  Deposit, net                                            |   |   | 827,082 |   |   | 880,890 |   |
| Other                  assets                                                 |   |   | 1,628,161 |   |   | 952,721 |   |
|                                                                          |   |   |   |   |   |   |   |
| **TOTAL                  ASSETS**                                             |   | $ | 377,103,703 |   | $ | 389,260,029 |   |
|                                                                          |   |   |   |   |   |   |   |
|                                                                          |   |   |   |   |   |   |   |
|                                                                          |   |   |   |   |   |   |   |
|                                                                          |   |   |   |   |   |   |   |
| **LIABILITIES                  AND STOCKHOLDERS' EQUITY**                     |
|                                                                          |   |   |   |   |   |   |   |
|                                                                          |   |   |   |   |   |   |   |
|                                                                               |   |   | **June                    30,** |   |   | **December                  31,** |   |
| **LIABILITIES:**                                                              |   |   | **2006** |   |   | **2005** |   |
| Deposits                                                                      |   |   |   |   |   |   |   |
|                    Non-interest bearing                                  |   | $ | 58,371,039 |   | $ | 51,466,230 |   |
|                    Interest bearing                                      |   |   | 205,700,037 |   |   | 205,910,680 |   |
| **                    Total deposits**                              |   |   | 264,071,076 |   |   | 257,376,910 |   |
|                                                                          |   |   |   |   |   |   |   |
| Federal                  Home Loan Bank advances                              |   |   | 66,456,714 |   |   | 84,196,067 |   |
| Securities                  sold under repurchase agreements                  |   |   | 6,717,328 |   |   | 8,032,721 |   |
| Accrued                  interest payable                                     |   |   | 1,830,348 |   |   | 1,438,836 |   |
| Advances                  from borrowers for taxes and insurance              |   |   | 277,228 |   |   | 437,222 |   |
| Accrued                  taxes and other liabilities                          |   |   | 968,998 |   |   | 1,363,115 |   |
| Junior                  subordinated debentures                               |   |   | 5,155,000 |   |   | 5,155,000 |   |
| **                    Total liabilities**                           |   |   | 345,476,692 |   |   | 357,999,871 |   |
|                                                                          |   |   |   |   |   |   |   |
|                                                                          |   |   |   |   |   |   |   |
|                                                                          |   |   |   |   |   |   |   |
| **STOCKHOLDERS'                  EQUITY:**                                    |   |   |   |   |   |   |   |
| Common                  stock - $2.50 par value per share;                    |   |   |   |   |   |   |   |
| 12,000,000                  shares authorized; 2,132,466 and 2,130,816 issued |   |   |   |   |   |   |   |
| and                  2,117,966 and 2,116,316 outstanding, for June 30, 2006   |   |   |   |   |   |   |   |
| and                  December 31, 2005, respectively.                         |   |   | 5,331,165 |   |   | 5,327,040 |   |
| Additional                  paid-in capital                                   |   |   | 7,290,368 |   |   | 7,254,113 |   |
| Retained                  earnings                                            |   |   | 20,987,796 |   |   | 19,949,100 |   |
| Accumulated                  other comprehensive income                       |   |   | (1,724,943 | ) |   | (1,012,720 | ) |
|                                                                          |   |   | 31,884,386 |   |   | 31,517,533 |   |
| Cost                  of 14,500 shares of common stock held by the company    |   |   | (257,375 | ) |   | (257,375 | ) |
| **                     Total stockholders' equity**            |   |   | 31,627,011 |   |   | 31,260,158 |   |
|                                                                          |   |   |   |   |   |   |   |
| **TOTAL                  LIABILITIES AND STOCKHOLDERS' EQUITY**               |   | $ | 377,103,703 |   | $ | 389,260,029 |   |
|                                                                          |   |   |   |   |   |   |   |

----

*Table          of Contents*

| **BRITTON&KOONTZ                  CAPITAL CORPORATION AND SUBSIDIARIES** |   |
|------------------------------------------------------------------------------|--------|
| **CONSOLIDATED                  STATEMENTS OF INCOME**                       |   |
|                                                                         |   |   |   |   |   |   |   |   |   |
|                                                                         |   | **Three                  Months Ended** |   | **Six                  Months Ended** |   |
|                                                                         |   | **June                  30,** |   | **June                  30,** |   |
|                                                                         |   | **2006** |   | **2005** |   | **2006** |   | **2005** |   |
| **INTEREST                  INCOME:**                                        |   |   |   |   |   |   |   |   |   |
| Interest                  and fees on loans                                  |   | $ | 4,487,117 |   | $ | 3,897,814 |   | $ | 8,825,562 |   | $ | 7,552,076 |   |
| Interest                  on investment securities:                          |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                    Taxable interest income                              |   |   | 938,396 |   |   | 1,107,046 |   |   | 1,896,028 |   |   | 2,197,076 |   |
|                    Exempt from federal taxes                            |   |   | 409,527 |   |   | 408,341 |   |   | 818,101 |   |   | 817,177 |   |
| Interest                  on federal funds sold                              |   |   | 9,313 |   |   | 276 |   |   | 21,333 |   |   | 768 |   |
| Total                  interest income                                       |   |   | 5,844,353 |   |   | 5,413,477 |   |   | 11,561,024 |   |   | 10,567,097 |   |
|                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **INTEREST                  EXPENSE:**                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest                  on deposits                                        |   |   | 1,566,428 |   |   | 936,198 |   |   | 3,006,576 |   |   | 1,822,239 |   |
| Interest                  on Federal Home Loan Bank advances                 |   |   | 697,148 |   |   | 849,974 |   |   | 1,414,093 |   |   | 1,651,010 |   |
| Interest                  on federal funds purchased                         |   |   | - |   |   | 76,740 |   |   | - |   |   | 106,260 |   |
| Interest                  on trust preferred securities                      |   |   | 99,852 |   |   | 79,112 |   |   | 199,070 |   |   | 150,811 |   |
| Interest                  on securities sold under repurchase agreements     |   |   | 80,453 |   |   | 60,935 |   |   | 160,881 |   |   | 107,698 |   |
| Total                  interest expense                                      |   |   | 2,443,881 |   |   | 2,002,959 |   |   | 4,780,620 |   |   | 3,838,018 |   |
|                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **NET                  INTEREST INCOME**                                     |   |   | 3,400,472 |   |   | 3,410,518 |   |   | 6,780,404 |   |   | 6,729,079 |   |
|                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Provision                  for loan losses                                   |   |   | 60,000 |   |   | 90,000 |   |   | 120,000 |   |   | 180,000 |   |
|                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **NET                  INTEREST INCOME AFTER PROVISION**                     |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **FOR                  LOAN LOSSES**                                         |   |   | 3,340,472 |   |   | 3,320,518 |   |   | 6,660,404 |   |   | 6,549,079 |   |
|                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **OTHER                  INCOME:**                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Service                  charges on deposit accounts                         |   |   | 345,435 |   |   | 342,228 |   |   | 672,783 |   |   | 661,480 |   |
| Income                  from fiduciary activities                            |   |   | 10,383 |   |   | 10,279 |   |   | 19,741 |   |   | 20,472 |   |
| Income                  from investment activities                           |   |   | 66,806 |   |   | 45,995 |   |   | 87,580 |   |   | 77,208 |   |
| Insurance                  premiums and commissions                          |   |   | 24 |   |   | 47 |   |   | 24 |   |   | 118 |   |
| Gain/(loss)                  on sale of mortgage loans                       |   |   | 54,721 |   |   | 82,246 |   |   | 139,869 |   |   | 176,760 |   |
| Gain/(loss)                  on sale of premises & equipment             |   |   | - |   |   | 150 |   |   | - |   |   | 150 |   |
| Gain/(loss)                  on sale of other assets                         |   |   | 400 |   |   | - |   |   | - |   |   | - |   |
| Other                                                                        |   |   | 115,282 |   |   | 112,380 |   |   | 284,437 |   |   | 260,903 |   |
| Total                  other income                                          |   |   | 593,051 |   |   | 593,325 |   |   | 1,204,434 |   |   | 1,197,091 |   |
|                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **OTHER                  EXPENSES:**                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Salaries                                                                     |   |   | 1,303,630 |   |   | 1,336,078 |   |   | 2,575,296 |   |   | 2,693,876 |   |
| Employee                  benefits                                           |   |   | 201,359 |   |   | 246,091 |   |   | 392,810 |   |   | 483,366 |   |
| Director                  fees                                               |   |   | 53,480 |   |   | 54,828 |   |   | 100,825 |   |   | 106,353 |   |
| Net                  occupancy expense                                       |   |   | 244,984 |   |   | 212,705 |   |   | 468,202 |   |   | 454,384 |   |
| Equipment                  expenses                                          |   |   | 260,594 |   |   | 272,122 |   |   | 524,479 |   |   | 527,806 |   |
| FDIC                  assessment                                             |   |   | 8,188 |   |   | 7,814 |   |   | 16,094 |   |   | 15,681 |   |
| Advertising                                                                  |   |   | 62,088 |   |   | 49,920 |   |   | 116,545 |   |   | 104,140 |   |
| Stationery                  and supplies                                     |   |   | 36,350 |   |   | 34,681 |   |   | 82,092 |   |   | 85,478 |   |
| Audit                  expense                                               |   |   | 44,194 |   |   | 47,753 |   |   | 89,675 |   |   | 95,204 |   |
| Other                  real estate expense                                   |   |   | 18,070 |   |   | 19,626 |   |   | 44,459 |   |   | 24,816 |   |
| Amortization                  of deposit premium                             |   |   | 26,904 |   |   | 26,904 |   |   | 53,808 |   |   | 53,808 |   |
| Other                                                                        |   |   | 516,166 |   |   | 478,239 |   |   | 1,001,020 |   |   | 982,285 |   |
| Total                  other expenses                                        |   |   | 2,776,007 |   |   | 2,786,761 |   |   | 5,465,305 |   |   | 5,627,197 |   |
|                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **INCOME                  BEFORE INCOME TAX EXPENSE**                        |   |   | 1,157,516 |   |   | 1,127,082 |   |   | 2,399,533 |   |   | 2,118,973 |   |
|                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Income                  tax expense                                          |   |   | 282,060 |   |   | 279,117 |   |   | 598,685 |   |   | 379,595 |   |
|                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **NET                  INCOME**                                              |   | $ | 875,456 |   | $ | 847,965 |   | $ | 1,800,848 |   | $ | 1,739,378 |   |
|                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **EARNINGS                  PER SHARE DATA:**                                |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Basic                  earnings per share                                    |   | $ | 0.41 |   | $ | 0.40 |   | $ | 0.85 |   | $ | 0.82 |   |
| Basic                  weighted shares outstanding                           |   |   | 2,117,376 |   |   | 2,116,316 |   |   | 2,117,084 |   |   | 2,116,316 |   |
|                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Diluted                  earnings per share                                  |   | $ | 0.41 |   | $ | 0.40 |   | $ | 0.85 |   | $ | 0.82 |   |
| Diluted                  weighted shares outstanding                         |   |   | 2,121,382 |   |   | 2,121,520 |   |   | 2,122,033 |   |   | 2,120,841 |   |

----

*Table          of Contents*

| **BRITTON&KOONTZ                  CAPITAL CORPORATION AND                  SUBSIDIARIES** |   |
|-----------------------------------------------------------------------------------------------|--------|
| **CONSOLIDATED                  STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY**               |   |
| **FOR                  THE SIX MONTHS ENDED JUNE 30, 2006 AND 2005**                          |   |
|                                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                          |   |   |   |   |   |   |   |   |   | Accumulated |   |   |   |   |   |
|                                                                                          |   |   |   |   |   | Additional |   |   |   | Other |   |   |   | Total |   |
|                                                                                          |   | Common                  Stock |   | Paid-in |   | Retained |   | Comprehensive |   | Treasury |   | Stockholders' |   |
|                                                                                          |   | Shares |   | Amount |   | Capital |   | Earnings |   | Income |   | Stock |   | Equity |   |
|                                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance                  at December 31, 2004                                                 |   |   | 2,116,316 |   | $ | 5,327,040 |   | $ | 7,254,113 |   | $ | 18,181,718 |   | $ | 646,272 |   | $ | (257,375 | ) | $ | 31,151,768 |   |
|                                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Comprehensive                  Income:                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                  income                                                                   |   |   | - |   |   | - |   |   | - |   |   | 1,739,378 |   |   | - |   |   |   |   |   | 1,739,378 |   |
|                                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other                  comprehensive                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                    income (net of tax):                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                  change in unrealized gain/(loss)                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                    on securities available for sale, net                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                    of taxes for $330,530                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   | (555,610 | ) |   |   |   |   | (555,610 | ) |
| Other                  Comprehensive gains from                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                    derivatives, net of reclassification                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                    adjustment of $27,971                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   | (47,020 | ) |   |   |   |   | (47,020 | ) |
| Total                  Comprehensive Income                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 1,136,748 |   |
|                                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash                  Dividend declared at $0.33 per share                          |   |   |   |   |   |   |   |   |   |   |   | (698,384 | ) |   |   |   |   |   |   |   | (698,384 | ) |
| Balance                  at June 30, 2005                                                     |   |   | 2,116,316 |   | $ | 5,327,040 |   | $ | 7,254,113 |   | $ | 19,222,712 |   | $ | 43,642 |   | $ | (257,375 | ) | $ | 31,590,132 |   |
|                                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance                  at December 31, 2005                                                 |   |   | 2,116,316 |   | $ | 5,327,040 |   | $ | 7,254,113 |   | $ | 19,949,100 |   | $ | (1,012,720 | ) | $ | (257,375 | ) | $ | 31,260,158 |   |
|                                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Comprehensive                  Income:                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                  income                                                                   |   |   | - |   |   | - |   |   | - |   |   | 1,800,848 |   |   | - |   |   |   |   |   | 1,800,848 |   |
|                                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other                  comprehensive                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                    income (net of tax):                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                  change in unrealized gain/(loss)                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                    on securities available for sale, net                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                    of taxes of $410,999                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   | (690,874 | ) |   |   |   |   | (690,874 | ) |
| Other                  Comprehensive gains from                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                    derivatives, net of reclassification                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                    adjustment of $12,700                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   | (21,349 | ) |   |   |   |   | (21,349 | ) |
| Total                  Comprehensive Income                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 1,088,625 |   |
| Stock                  Options exercised                                                      |   |   | 1,650 |   |   | 4,125 |   |   | 36,255 |   |   |   |   |   |   |   |   |   |   |   | 40,380 |   |
| Cash                  Dividend declared at $0.36 per share                                    |   |   |   |   |   |   |   |   |   |   |   | (762,152 | ) |   |   |   |   |   |   |   | (762,152 | ) |
| Balance                  at June 30, 2006                                                     |   |   | 2,117,966 |   | $ | 5,331,165 |   | $ | 7,290,368 |   | $ | 20,987,796 |   | $ | (1,724,943 | ) | $ | (257,375 | ) | $ | 31,627,011 |   |
|                                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

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*Table          of Contents*

| **BRITTON&KOONTZ                  CAPITAL CORPORATION AND SUBSIDIARIES**  |   |
|-------------------------------------------------------------------------------|--------|
| **CONSOLIDATED                  STATEMENTS OF CASH FLOWS**                    |   |
| **PERIODS                  ENDED JUNE 30,**                                   |   |
|                                                                          |   |   |   |   |   |
|                                                                          |   | **2006** |   | **2005** |   |
| **CASH                  FLOWS FROM OPERATING ACTIVITIES**                     |   |   |   |   |   |
| Net                  income                                                   |   | $ | 1,800,848 |   | $ | 1,739,378 |   |
| Adjustments                  to reconcile net income to net cash              |   |   |   |   |   |   |   |
|                     provided by (used in) operating activities:     |   |   |   |   |   |   |   |
| Deferred                  income taxes                                        |   |   | (238,635 | ) |   | (162,737 | ) |
| Provision                  for loan losses                                    |   |   | 120,000 |   |   | 180,000 |   |
| Provision                  for depreciation                                   |   |   | 389,931 |   |   | 387,051 |   |
| Stock                  dividends received                                     |   |   | (95,600 | ) |   | (80,000 | ) |
| (Gain)/loss                  on sale of other real estate                     |   |   | (3,323 | ) |   | 2,464 |   |
| (Gain)/loss                  on sale of mortgage loans                        |   |   | (139,869 | ) |   | (176,760 | ) |
| (Gain)/loss                  on sale of premises and equipment                |   |   | - |   |   | (150 | ) |
| Net                  amortization (accretion) of securities                   |   |   | 82,593 |   |   | 178,935 |   |
| Amortization                  of deposit premium                              |   |   | 53,808 |   |   | 53,808 |   |
| Writedown                  of other real estate                               |   |   | 22,178 |   |   | - |   |
| Net                  change in:                                               |   |   |   |   |   |   |   |
| Loans                  held for sale                                          |   |   | 112,229 |   |   | (760,341 | ) |
| Accrued                  interest receivable                                  |   |   | (3,793 | ) |   | (109,990 | ) |
| Cash                  surrender value                                         |   |   | (20,046 | ) |   | 26,823 |   |
| Other                  assets                                                 |   |   | (47,155 | ) |   | (81,131 | ) |
| Accrued                  interest payable                                     |   |   | 391,512 |   |   | (66,006 | ) |
| Accrued                  taxes and other liabilities                          |   |   | (394,113 | ) |   | (126,927 | ) |
| Net                  cash provided by (used in) operating activities          |   |   | 2,030,565 |   |   | 1,004,417 |   |
|                                                                          |   |   |   |   |   |   |   |
| **CASH                  FLOWS FROM INVESTING ACTIVITIES**                     |   |   |   |   |   |   |   |
| (Increase)/decrease                  in federal funds sold                    |   |   | 398,688 |   |   | 100,822 |   |
| Proceeds                  from sales, maturities and paydowns                 |   |   |   |   |   |   |   |
| of                  investment securities                                     |   |   | 8,147,622 |   |   | 12,766,588 |   |
| Redemption/(Purchase)                  of FHLB stock                          |   |   | 1,044,000 |   |   | (371,500 | ) |
| Purchases                  of investment securities                           |   |   | (612,882 | ) |   | (14,029,560 | ) |
| (Increase)/decrease                  in loans                                 |   |   | 1,981,361 |   |   | (16,310,318 | ) |
| Proceeds                  from sale and transfers of other real estate        |   |   | 34,401 |   |   | 109,999 |   |
| Proceeds                  from sale and transfers of other repossessed assets |   |   | 4,500 |   |   | 6,565 |   |
| Proceeds                  from sale of premises and equipment                 |   |   | - |   |   | 150 |   |
| Purchase                  of premises and equipment                           |   |   | (305,257 | ) |   | (407,087 | ) |
| Net                  cash provided by (used in) investing activities          |   |   | 10,692,433 |   |   | (18,134,341 | ) |

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*Table          of Contents*

|                                                                           |   |     |        | **(Continued)** |   |
|--------------------------------------------------------------------------------|--------|----------|-------------|-----------------|--------|
| **BRITTON                  & KOONTZ CAPITAL CORPORATION AND SUBSIDIARIES** |   |
| **CONSOLIDATED                  STATEMENTS OF CASH FLOWS**                     |   |
| **PERIODS                  ENDED JUNE 30,**                                    |   |
|                                                                           |   |     |        |            |   |
|                                                                           |   | **2006** |        | **2005**        |   |
|                                                                           |   |     |        |            |   |
| **CASH                  FLOWS FROM FINANCING ACTIVITIES**                      |   |     |        |            |   |
| Increase                  /(decrease) in customer deposits                     |   |     | 6,112,286   |            |   | 3,628,209 |   |
| Increase                  /(decrease) in brokered deposits                     |   |     | 581,879     |            |   | (1,583,000 | ) |
| Increase                  /(decrease) in securities sold under                 |   |     |        |            |   |   |   |
| repurchase                  agreements                                         |   |     | (1,315,393  | )               |   | 576,496 |   |
| Increase                  /(decrease) in federal funds purchased               |   |     | -           |            |   | 9,685,000 |   |
| Increase                  /(decrease) in FHLB advances                         |   |     | (17,739,354 | )               |   | 9,166,232 |   |
| Increase                  /(decrease) in advances from borrowers               |   |     |        |            |   |   |   |
| for                  taxes and insurance                                       |   |     | (159,994    | )               |   | (120,189 | ) |
| Cash                  dividends paid                                           |   |     | (762,152    | )               |   | (698,384 | ) |
| Common                  stock issued                                           |   |     | 40,380      |            |   | - |   |
| Net                  cash provided by (used in) financing activities           |   |     | (13,242,348 | )               |   | 20,654,364 |   |
|                                                                           |   |     |        |            |   |   |   |
| **NET                  INCREASE/(DECREASE) IN CASH AND DUE FROM BANKS**        |   |     | (519,350    | )               |   | 3,524,440 |   |
|                                                                           |   |     |        |            |   |   |   |
| **CASH                  AND DUE FROM BANKS AT BEGINNING OF PERIOD**            |   |     | 9,825,459   |            |   | 6,576,825 |   |
|                                                                           |   |     |        |            |   |   |   |
| **CASH                  AND DUE FROM BANKS AT END OF PERIOD**                  |   | $        | 9,306,109   |            | $      | 10,101,265 |   |
|                                                                           |   |     |        |            |   |   |   |
|                                                                           |   |     |        |            |   |   |   |
|                                                                           |   |     |        |            |   |   |   |
|                                                                           |   |     |        |            |   |   |   |
| **SUPPLEMENTAL                  DISCLOSURES OF CASH FLOW**                     |   |     |        |            |   |   |   |
| **INFORMATION:**                                                               |   |     |        |            |   |   |   |
|                                                                           |   |     |        |            |   |   |   |
| Cash                  paid during the year for interest                        |   | $        | 4,389,108   |            | $      | 3,904,023 |   |
| Cash                  paid during the year for income taxes                    |   | $        | 1,051,298   |            | $      | 467,955 |   |
|                                                                           |   |     |        |            |   |   |   |
| **SCHEDULE                  OF NONCASH INVESTING AND**                         |   |     |        |            |   |   |   |
| **FINANCING                  ACTIVITIES:**                                     |   |     |        |            |   |   |   |
|                                                                           |   |     |        |            |   |   |   |
| Transfers                  from loans foreclosed to other real estate          |   | $        | 78,078      |            | $      | 401,121 |   |
|                                                                           |   |     |        |            |   |   |   |
| Change                  in unrealized gains (losses)                           |   |     |        |            |   |   |   |
| on                  securities available for sale                              |   | $        | (1,101,874  | )               | $      | (886,140 | ) |
|                                                                           |   |     |        |            |   |   |   |
| Change                  in the deferred tax effect in unrealized               |   |     |        |            |   |   |   |
| gains                  (losses) on securities available for sale               |   | $        | (410,999    | )               | $      | (330,530 | ) |
|                                                                           |   |     |        |            |   |   |   |
| Change                  in unrealized gains (losses) on derivative             |   | $        | (34,049     | )               | $      | (74,991 | ) |
|                                                                           |   |     |        |            |   |   |   |
| Change                  in the deferred tax effect in                          |   |     |        |            |   |   |   |
| unrealized                  gains (losses) on derivative                       |   | $        | (12,700     | )               | $      | (27,971 | ) |

----

*Table          of Contents*

**BRITTON&KOONTZ      CAPITAL CORPORATION AND      SUBSIDIARIES**

**NOTES      TO THE CONSOLIDATED FINANCIAL STATEMENTS**

**JUNE      30, 2006 AND DECEMBER 31, 2005**

**Note      A. Basis of Presentation**

**Note      B. Interest Rate Risk Management**

**Note      C. Loans Held-for-Sale**

**Note      D. Junior Subordinated Debentures**

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*Table            of Contents*

**Note      E. Loan Commitments**

**Note      F. Earnings per Share**

|                                                       |   | For                the three months endedJune                30, |      |
|------------------------------------------------------------|--------|------------------------------------------------------------------|-----------|
|                                                       |   | 2006                                                             |      | 2005 |   |
| Basic                weighted average shares outstanding   |   |                                                             | 2,117,376 |   |   | 2,116,316 |   |
| Dilutive                effect of granted options          |   |                                                             | 4,006     |   |   | 5,204 |   |
|                                                       |   |                                                             |      |   |   |   |   |
| Diluted                weighted average shares outstanding |   |                                                             | 2,121,382 |   |   | 2,121,520 |   |
| Net                income                                  |   | $                                                                | 875,456   |   | $ | 847,965 |   |
| Net                income per share-basic                  |   | $                                                                | 0.41      |   | $ | 0.40 |   |
| Net                income per share-diluted                |   | $                                                                | 0.41      |   | $ | 0.40 |   |

|                                                       |   | For                the six months endedJune                30, |      |
|------------------------------------------------------------|--------|----------------------------------------------------------------|-----------|
|                                                       |   | 2006                                                           |      | 2005 |   |
| Basic                weighted average shares outstanding   |   |                                                           | 2,117,084 |   |   | 2,116,316 |   |
| Dilutive                effect of granted options          |   |                                                           | 4,948     |   |   | 4,525 |   |
|                                                       |   |                                                           |      |   |   |   |   |
| Diluted                weighted average shares outstanding |   |                                                           | 2,122,033 |   |   | 2,120,841 |   |
| Net                income                                  |   | $                                                              | 1,800,848 |   | $ | 1,739,378 |   |
| Net                income per share-basic                  |   | $                                                              | 0.85      |   | $ | 0.82 |   |
| Net                income per share-diluted                |   | $                                                              | 0.85      |   | $ | 0.82 |   |

**Item      2. Management’s Discussion and Analysis of Financial Condition      and Results of Operations**

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*Table            of Contents*

**SUMMARY**

**Financial      Condition**

**Assets**

** **

**Investment      Securities**

----

*Table            of Contents*

**TABLE      1: COMPOSITION OF INVESTMENT PORTFOLIO **
**(**
*Amortized      Cost*
**)**

|                                      |   | 06/30/06 |        | 12/31/05 |   |
|-------------------------------------------|--------|----------|-------------|----------|--------|
| Mortgage-Backed                Securities |   | $        | 68,781,058  |     | $      | 76,496,343 |   |
| Agencies                Obligations       |   |     | 6,495,661   |     |   | 6,495,545 |   |
| Obligations                of State and   |   |     |        |     |   |   |   |
| Political                Subdivisions     |   |     | 35,002,601  |     |   | 34,904,765 |   |
| Total                                     |   | $        | 110,279,320 |     | $      | 117,896,653 |   |

**Loans      held to maturity**

**TABLE      2: COMPOSITION OF LOAN PORTFOLIO **
***(including      loans held for sale)***

|                                                    |   | 06/30/06 |        | 12/31/05 |   |
|---------------------------------------------------------|--------|----------|-------------|----------|--------|
| Commercial,                financial & agricultural |   | $        | 31,642,000  |     | $      | 32,868,000 |   |
| Real                estate-construction                 |   |     | 39,395,000  |     |   | 30,069,000 |   |
| Real                estate-1-4 family residential       |   |     | 81,644,000  |     |   | 94,126,000 |   |
| Real                estate-other                        |   |     | 78,795,000  |     |   | 75,237,000 |   |
| Installment                                             |   |     | 11,513,000  |     |   | 12,478,000 |   |
| Other                                                   |   |     | 187,000     |     |   | 306,000 |   |
| Total                loans                              |   | $        | 243,176,000 |     | $      | 245,084,000 |   |

**Bank      Premises**

**Asset      Quality**

----

*Table            of Contents*

**TABLE      3: BREAKDOWN OF NONPERFORMING ASSETS**

|                                                                                                                                     |   | 06/30/06                              |   | 12/31/05 |   |
|------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------|--------|----------|--------|
|                                                                                                                                     |   | (dollars                in thousands) |   |
| Non-accrual                loans by type:                                                                                                |   |                                  |   |     |   |   |   |
| Real                estate                                                                                                               |   | $                                     | 277    |     | $      | 413 |   |
| Installment                                                                                                                              |   |                                  | 48     |     |   | 72 |   |
| Commercial                and all other loans                                                                                            |   |                                  | 305    |     |   | 574 |   |
| Total                non-accrual loans                                                                                                   |   |                                  | 630    |     |   | 1,059 |   |
| Loans                past due 90 days or more                                                                                            |   |                                  | 387    |     |   | 201 |   |
| Total                nonperforming loans** **                                                                                       |   |                                  | 1,017  |     |   | 1,260 |   |
| Other                real estate owned (net)                                                                                             |   |                                  | 1,339  |     |   | 1,471 |   |
| Total                nonperforming assets                                                                                                |   | $                                     | 2,356  |     | $      | 2,731 |   |
| Nonperforming                loans as a percent of loans, net of unearned interest and loans held                for                sale |   |                                  | .42    | %        |   | .51 | % |

**Allowance      for Possible Loan Losses**

----

*Table            of Contents*

**Provision      for Possible Loan Losses**

**TABLE      4: ACTIVITY OF ALLOWANCE FOR POSSIBLE LOAN LOSSES**

|                                                                                                                              |   | 06/30/06                              |   | 06/30/05 |   |
|-----------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------|--------|----------|--------|
|                                                                                                                              |   | (dollars                in thousands) |   |
| Balance                at beginning of period                                                                                     |   | $                                     | 2,378  |     | $      | 2,237 |   |
| Charge-offs:                                                                                                                      |   |                                  |   |     |   |   |   |
| Real                Estate                                                                                                        |   |                                  | (8     | )        |   | (50 | ) |
| Commercial                                                                                                                        |   |                                  | (16    | )        |   | (8 | ) |
| Installment                and other                                                                                              |   |                                  | (40    | )        |   | (25 | ) |
| Recoveries:                                                                                                                       |   |                                  |   |     |   |   |   |
| Real                Estate                                                                                                        |   |                                  | 22     |     |   | 26 |   |
| Commercial                                                                                                                        |   |                                  | 7      |     |   | 8 |   |
| Installment                and other                                                                                              |   |                                  | 8      |     |   | 25 |   |
| Net                (charge-offs)/recoveries                                                                                       |   |                                  | (27    | )        |   | (24 | ) |
| Provision                charged to operations                                                                                    |   |                                  | 120    |     |   | 180 |   |
| Balance                at end of period                                                                                           |   | $                                     | 2,471  |     | $      | 2,393 |   |
| Allowance                for loan losses as a percent of loans, net of unearned interest &                loans held for sale |   |                                  | 1.02   | %        |   | 1.02 | % |
| Net                charge-offs as a percent of average loans                                                                      |   |                                  | .02    | %        |   | .01 | % |

**Potential      Problem Loans**

**Deposits      **

----

*Table            of Contents*

**TABLE      5: COMPOSITION OF DEPOSITS**

|                                         |   | 06/30/06 |        | 12/31/05 |   |
|----------------------------------------------|--------|----------|-------------|----------|--------|
| Non-Interest                Bearing          |   | $        | 58,371,039  |     | $      | 51,466,230 |   |
| NOW                Accounts                  |   |     | 22,456,278  |     |   | 23,016,487 |   |
| Money                Market Deposit Accounts |   |     | 41,709,764  |     |   | 36,516,395 |   |
| Savings                Accounts              |   |     | 19,006,363  |     |   | 23,032,910 |   |
| Certificates                of Deposit       |   |     | 122,527,632 |     |   | 123,344,888 |   |
| Total                Deposits                |   | $        | 264,071,076 |     | $      | 257,376,910 |   |

**Borrowings      **

**Capital**

** **

**Off-Balance      Sheet Arrangements**

**Results      of Operations**

**Net      Income**

----

*Table            of Contents*

**Net      Interest Income and Net Interest Margin**

**Non-Interest      Income **

**Non-Interest      Expense**

----

*Table            of Contents*

**Income      Taxes**

**Liquidity      and Capital Resources**

** **

----

*Table            of Contents*

**Contractual      Obligations**

**DISCLOSURE      REGARDING FORWARD-LOOKING STATEMENTS**

**Item      3.**
**Quantitative      and Qualitative Disclosures About Market Risk**

----

*Table            of Contents*

**Item      4.**
**Controls      and Procedures**

**PART      II. OTHER INFORMATION**

**Item      1A.**
**Risk      Factors**

**Item      2.**
**Unregistered      Sales of Equity Securities and Use of Proceeds**

**Item      4.**
**Submission      of Matters to a Vote of Security Holders**

----

*Table            of Contents*

|   Nominee                 | Number                  of Votes Cast “FOR”Nominee |  Number                  of Votes Withheld |
|-------------------------------------|----------------------------------------------------------------|-------------------------------------------------|
| Bethany                  L. Overton | 1,351,750                                                      | 104,942                                         |
| Robert                  R. Punches  | 1,340,738                                                      | 115,954                                         |
| Paul                  H. Benoist    | 1,098,662                                                      | 0                                               |

|   Nominee             | Number                  of Votes Cast “FOR”Nominee |  Number                  of Votes Withheld |
|---------------------------------|----------------------------------------------------------------|-------------------------------------------------|
| A.                  J. Ferguson | 1,352,448                                                      | 651,154                                         |

| For       | Against | Abstain | Total     | Broker                  Non-Votes |
|-----------|---------|---------|-----------|-----------------------------------|
| 1,119,254 | 706,788 | 9,312   | 1,835,354 | 170,669                           |

| For     | Against   | Abstain | Total     | Broker                  Non-Votes |
|---------|-----------|---------|-----------|-----------------------------------|
| 775,567 | 1,026,077 | 27,798  | 1,829,442 | 176,581                           |

| Stand-offs | Set                asides | Total |
|------------|---------------------------|-------|
| 0          | 9,484                     | 9,484 |

----

*Table            of Contents*

|   | **Item                6.** | **Exhibits** |
|--------|----------------------------|--------------|

| Exhibit |   | Description                of Exhibit                                                                                                                                                                                                                                                                                                                                                                                     |
|---------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|    |   |                                                                                                                                                                                                                                                                                                                                                                                                                      |
| 3.1     |   | Restated                  Articles of Incorporation of Britton &                  Koontz Capital Corporation, as amended                                                                                                                                                                                                                                                                                              |
|    |   |                                                                                                                                                                                                                                                                                                                                                                                                                      |
| 3.2     | *      | By-Laws                  of Britton & Koontz Capital Corporation, as amended and restated,                  incorporated by reference to Exhibit 3.2 to Registrant’s Annual Report on                  Form 10-K filed with the Securities and Exchange Commission on                  March 27,                  2006.                                                                                         |
|    |   |                                                                                                                                                                                                                                                                                                                                                                                                                      |
| 4.1     | *      | Shareholder                Rights Agreement dated June 1, 1996, between Britton & Koontz Capital                Corporation and Britton & Koontz First National Bank, as Rights Agent,                incorporated by reference to Exhibit 4.3 to Registrant’s Registration                Statement on Form S-8, Registration No. 333-20631, filed with the                Commission on January 29, 1997. |
|    |   |                                                                                                                                                                                                                                                                                                                                                                                                                      |
| 31.1    |   | Certifications                of the Chief Executive Officer, as                required pursuant to Section 302 of the Sarbanes-Oxley Act of                2002                                                                                                                                                                                                                                                         |
|    |   |                                                                                                                                                                                                                                                                                                                                                                                                                      |
| 31.2    |   | Certifications                of the Chief Financial Officer, as                required pursuant to Section 302 of the Sarbanes-Oxley Act of                2002                                                                                                                                                                                                                                                         |
|    |   |                                                                                                                                                                                                                                                                                                                                                                                                                      |
| 32.1    |   | Certifications                of the Chief Executive Officer, as                required pursuant to Section 906 of the Sarbanes-Oxley Act of                2002                                                                                                                                                                                                                                                         |
|    |   |                                                                                                                                                                                                                                                                                                                                                                                                                      |
| 32.2    |   | Certifications                of the Chief Financial Officer, as                required pursuant to Section 906 of the Sarbanes-Oxley Act of                2002                                                                                                                                                                                                                                                         |

----

*Table            of Contents*

**SIGNATURES**

| Date:  | August                04, 2006 | /s/              W. Page Ogden         |
|--------|--------------------------------|----------------------------------------|
|   |                           | W.                Page Ogden           |
|   |                           | Chief                Executive Officer |

| Date:  | August                04, 2006 | /s/              William M. Salters    |
|--------|--------------------------------|----------------------------------------|
|   |                           | William                M. Salters      |
|   |                           | Chief                Financial Officer |

----

*Table            of Contents*

**EXHIBIT          INDEX**

| Exhibit | Description                    of Exhibit                                                                                                                                     |
|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|    |                                                                                                                                                                          |
| 3.1     | Restated                    Articles of Incorporation of Britton & Koontz Capital Corporation, as                    amended                                              |
|    |                                                                                                                                                                          |
| 31.1    | Certifications                    of the Chief Executive Officer, as required pursuant to Section                    302 of the                    Sarbanes-Oxley Act of 2002 |
|    |                                                                                                                                                                          |
| 31.2    | Certifications                    of the Chief Financial Officer, as required pursuant to Section                    302 of the                    Sarbanes-Oxley Act of 2002 |
|    |                                                                                                                                                                          |
| 32.1    | Certifications                    of the Chief Executive Officer, as required pursuant to Section                    906 of the                    Sarbanes-Oxley Act of 2002 |
|    |                                                                                                                                                                          |
| 32.2    | Certifications                    of the Chief Financial Officer, as required pursuant to Section                    906 of the                    Sarbanes-Oxley Act of 2002 |